Abstract

This paper defines a complicated calculation
model of sustainable development. Social welfare can be
expressed quantitatively by GDP growth. The empirical data on changes in Serbian GDP growth in the period: 2002-2011, served as a base values on which the assumed
correction of external costs was applied. For our analysis we
used numerical simulation approach. Our results show that
variable GDP has the sixth-degree polynomial form with the empirical Serbian data in observed period. Consequently, the results show the viability of the economic and ecological
development in the framework of our assumptions. We
defined the external costs or social costs of externalities as "the costs of nature", and they are structured so that they make the sum of losses of the environment due to exploitation of non renewable resources, pollution and the necessary investments for the elimination of pollution costs.
Additionally, the paper presents utility function that includes both market and non-market assets, or consumption of these assets by an individual.